Virginia residents may be interested in the latest development of the potential sale of Cooper Tire to an India-based company, Apollo Tyres. Cooper announced on Dec. 30 that it is calling off the deal. The Ohio-based company said that Apollo did not have financing for the deal and that Apollo had failed to reach an agreement with Cooper's union employees. Apollo said that it is disappointed in Cooper's decision and may pursue legal action.
The two companies agreed to the acquisition in June 2013. However, the negotiations quickly became contentious as Apollo struggled to reach a deal with the union groups. Apollo also attempted to get a better price on the deal by claiming that labor issues and weak profits justified a price reduction. In December, Cooper took Apollo to court for breach of contract, but the judge in the case ruled that Apollo had not broken the terms of the deal.
It's not yet clear what the legal ramifications are for Cooper's withdrawal from the deal. The company said it would pursue $112.5 million in reverse termination fees from Apollo and may pursue other damages. The contract called for a $50 million termination fee from Cooper, but Cooper executives said they feel they don't owe that money to Apollo.
Business acquisitions can be complicated affairs, no matter how large or small the companies are. It's not uncommon for what initially seems like an amicable deal to turn into a contentious dispute. Issues like compensation, retention of employees and company structure can all play parts in the merger and acquisition process. A business attorney may be able to help a company protect its rights during merger or acquisition negotiations.
Source: ABC News, "Cooper Tire Ends Buyout Agreement With Apollo", Tom Murphy, December 30, 2013